A bank issuing a letter of credit on behalf of an importer is obligated to honor the letter of credit regardless of the buyer's willingness or ability to pay.

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This is because a letter of credit is a payment guarantee from the bank to the exporter, and not dependent on the buyer's payment or financial situation. The bank is obligated to pay the exporter upon presentation of the required documents, as long as they comply with the terms and conditions of the letter of credit.

A Bank Issuing a Letter of Credit on Behalf of an Importer